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Asset & Wealth Management

Meet three Swiss fintechs digitalizing wealth mgmt

These startups are tackling funds suitability, private equity payouts, and the next gen in robo advisors.



Zurich is one of Europe’s hotbeds for fintech innovation. Here are three companies using digitalization tools to address different parts of the asset-management industry.


This company, created by Andreas Zimmerman, is attempting to build the next generation in robo advisory. If Robo 1.0 was limited by its inability to account for a client’s holistic wealth, assets, and needs, then Robo 2.0 has to deliver a far more comprehensive service.

Andreas Zimmerman

Zimmerman, formerly a partner at KPMG, including extensive time in East Asia, is developing an automated portfolio optimizer. What that means is that a client will be able to see the entire range of what-ifs? along the risk/return spectrum.

Zimmerman intends to fundraise and bring the solution to bank treasurers, sell-side researchers, and relationship managers at private banks.

Traditionally, quant models to work out a portfolio composition ended up with a single number, value at risk, or VAR, which most analysts and PMs relied on (lazily). VAR was a single number, a statistical likelihood of the portfolio losing its money. Overreliance on an easy figure, and ignoring the nuances around it, led to lots of heavy losses during the 2008 crisis.

The R.M. uses this to become a coach instead of a salesperson

Andreas Zimmerman, FinHorizons

Zimmerman’s model incorporates far more asset classes, and then analyzes the interdependencies (the relationships) among them. It’s more sophisticated than a simple covariance analysis (how one asset class impacts another).

“The technology is pure quant,” he said. “Today people call this artificial intelligence.” But he keeps the work tailored to how people work in financial services today: the outcomes can all be downloaded onto Excel.

What differs is that Zimmerman’s tech is meant to be applied to a client’s goals-oriented framework, so the portfolio manager can dial exposures and risk up and down, with every scenario over any time period mapped out. It’s a visual way to understand what, exactly, a client’s getting into with a given portfolio. But it is meaningless if a sell side is just pushing a particular product.

“The relationship manager uses this to become a coach instead of a salesperson,” Zimmerman said.

From his experience working with Asian banks, he believes institutions in Hong Kong and Singapore are more likely to become his first clients. In the meantime he will need to find a partner that can add a nicer front end.

Investment Navigator

This company is now in its fifth year, selling a solution allowing relationship managers to identify what funds are legally suited to a given client.

Tobias Houdek, product and marketing manager, says the company relies on fund data compiled by its strategic investor, FundInfo. He set up Investment Navigator with the company’s CEO, Alberto Rama, after they worked together at UBS.

Tobias Houdek

Investment Navigator uses some basic A.I. tools to read the legal documents with each fund, and manages a database of what funds can be sold to whom. It’s a database, though, not a self-learning solution.

Its task is more complicated than it sounds, though, because the range of share classes has exploded to the thousands. Banks also have their own rules of who can buy what.

For example, a Brazilian investor may not be allowed to invest in a structured product that uses Brazilian underlying assets – if the customer is based overseas. Any factor – the person’s passport, their residence, the location of their booking center or advisor – can affect whether or not they can buy a product. Sometimes a negative outcome is absolute, and sometimes it’s conditional on other compliance checks.

Most banks’ relationship management teams take 45 minutes of RM time to look up this information. Investment Navigator cuts the process down to one minute, as well as provides alternatives in case a particular product turns out to be a problem.

Houdek says the challenge is how wealth managers integrate the system into their current processes. The company is adding securities and other bells and whistles to round out its software-as-a-subscription offer. The firm also hopes to win its first buy-side clients, with those in Asia likely first movers; it has recently opened a sales office in Singapore.


CEO and founder Oliver Freigang has developed this company to automate calculations of waterfall payouts by private-equity firms and other alternative asset managers.

P.E. firms pursue complicated methods in how they work out how much they should earn, and how much they should pay out to their clients, the investors (or, in industry lingo, the limited partners, or L.P.s).

Oliver Freigang

Currently all firms do this using Excel, but the complexity of these calculations makes this prone to errors and time consuming. It is also very difficult for third parties (clients, auditors, employees) to understand payouts – which has suited private-equity executives just fine.

An auditor has no chance understanding this

Oliver Freigang, Qashqade

Many factors go into how a P.E. firm decides to divvy up its earnings. Usually it first pays back capital contributions from investors, with interest – but at what point they charge interest, on what base, and how they work out the “catch up” (the firm’s own cut) are all kept mysterious. But working these out even internally is a time-consuming process, and only the savviest Excel formula jockeys avoid making mistakes that can throw the numbers off.

“An auditor has no chance of understanding this,” he said.

But in some cases they may wish to share this information; at the very least it would save days’ worth of work with accountants and auditors. Or L.P.s could also use the tool to estimate quickly what payout they should get.

The software has been designed so that non-experts, with a little training, can easily drop’n’drag numbers and create a waterfall quickly, said Freigang. Normally this can take days. Unlike waterfalls on Excel, which mingle the payout calculcations with a log of transactions, Qashqade keeps these workflows separate until the last minute, when the actual calculation is made. That allows users flexibility, so they can look at an entire fund or a single deal.

Freigang notes that alternative asset managers are increasing their portfolio exposures to fintech and other digital-first companies – but remain very old-school in their own firms. Also, fintech requires domain expertise, and hardly anyone in tech understands private equity.

Asset & Wealth Management

Lu Global reverses the Lufax story

Lufax began as a P2P and became a wealth manager – in Singapore, it’s adding secondary trading.




Kit Wong, Lu

Lu Global, a wealth-management fintech in Singapore, has just launched a marketplace to enable its customers to trade the same products they bought on the company’s website.

Kit Wong, CEO at Lu Global, says the company has developed its consumer-facing business and is now selling both funds and structured products.

But it believes some clients want to get out of these positions, particularly structured notes. Instead of having to hold them to maturity, they can now see if other users in the Lu system are willing to buy them (at a discount).

Wong says the firm, which has a capital markets services (CMS) license in Singapore, serves about 300,000 customers. Some are resident in Singapore (where the business can only market to accredited investors), others are from outside, who can be either professional investors or retail.

The biggest segment of investors are mainland Chinese, who already know the Lufax brand, but there are also a lot of Taiwanese and Hongkongers, and a growing number of Southeast Asian users, Wong says.

The electronic marketplace has just gone live, so it has no volumes to speak of. Lu Global does not take positions in this secondary trading environment – it merely matches its existing customer base in case users want to make trades among themselves.

Lu Global declined to state its assets under management. Wong says the largest number of products are mutual funds, issued by the likes of BlackRock and Pimco – but the biggest volumes are in structured products.

He believes this may have to do with economic and political uncertainty in the region, which is spurring demand for products with known outcomes and terms.

But such products only pay out upon maturity – and the same destabilizing factors may be leading more investors to want to cash out early, even if they do so at a loss. But providing a marketplace not only gives them access to liquidity (assuming there’s a buyer on the other side) but also lets them sell at a better rate.

The launch of this product is a strange parallel to parent Lufax’s journey. Shanghai-based Lufax began in 2011 as a peer-to-peer marketplace for transactions, financing, and investment management. It exited the transactions and financing aspects to focus just on wealth management.

Lu Global built itself first as a marketplace for wealth products – but now it’s expanding into secondary trading, creating a marketplace for customers to exchange financial products before they reach maturity among themselves – a different kind of P2P than lending, which mainland authorities are clamping down on.

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Asset & Wealth Management

Half of Invesco’s China sales now via digital

But as the PRC joint venture learns how to distribute digitally, Invesco remains unsure of robo’s role in Asia.




Andrew Lo, Invesco

This week DigFin is highlighting three asset-management firms’ approach to digital distribution, particularly in China. See also strategies from AllianceBernstein and BEA Union Investments. Go here for more insights into digital asset and wealth management.

Invesco is using its joint venture in mainland China, Invesco Great Wall, to figure out digital distribution.

The business now manages about $50 billion of assets, of which about 80% is retail, making it the fourth-largest Sino-foreign fund house in China. Over the past two years, half of retail inflows have come from new digital channels, as opposed to the traditional reliance upon banks, says Andrew Lo, senior managing director and Asia-Pacific CEO of Invesco in Hong Kong.

This is in keeping with a broader trend in the global mutual funds industry, which is shifting from one based on products to one focused more on investment solutions. “There’s an emphasis on designing outcomes for clients, such as through asset allocation or structuring,” to combine types of risk and asset classes.

That’s driven both by client demand as well as market volatility and challenges to active fund houses to deliver alpha (outperformance) on a net-free basis, compared to ultra-affordable passive investments tracking a benchmark.

Reaching retail

That’s been an emerging story for the funds industry over the past decade. But on top of that is a new wrinkle: the ability to use technology to speed up operations and to reach more people.

“Technology is now changing the distribution landscape,” Lo said. “In China, it’s having quite an impact on reaching retail investors.”

For now this has been a story unique to mainland China, where existing bank channels (which dominate funds distribution in most Asian markets) are not well developed, and where regulation favors digital disrupters like Ant Financial.

The power of digital was evident in Ant’s success with money-market funds (under an affiliated fund house, Tianhong Asset Management), but it has now extended to equity and quant products onshore – products that Invesco’s J.V. now sells through fintech channels, including Ant, East Money Information, (Jingdong) and Snowball Finance (Xueqiu).

This has not been straightforward, however. Fund management companies are designed to cater to bank distributors, and are built on old-fashioned tech.

Still learning

“We learned how to do digital marketing,” Lo said. “It’s very different to traditional distribution. It’s iterative, it changes fast, and you have to listen to customer feedback.” Partnering with digital channels has also required a different sense of product design, and to rebuild the company’s operational process to support round-the-clock digital sales and support.

Lo says the experience will be increasingly relevant as other markets digitalize, although they may need to be tweaked, depending on local regulation, client behavior and distributor demands. “Some things we can learn and apply elsewhere as the world goes digital,” Lo said.

The onshore funds market manages about Rmb14 trillion (almost $2 trillion) in total assets among 135 asset managers authorized to sell to retail clients, of which are 44 Sino-foreign JVs.

But most of these JVs are run by the local partner, with foreign shareholders having less influence. They are limited to stakes no greater than 49%, and local partners are often banks or other powerful institutions. One analyst told DigFin that local fund houses are not particularly bold when it comes to digital channels; and even if they are, the lessons don’t flow to the foreign partner.

But Invesco Great Wall’s case is different. Both Invesco and Great Wall Securities own 49%, with two other shareholders holding another 1% each. Given that Great Wall Securities has its own in-house funds business, it has been willing to let Invesco drive the business. (Beijing has recently permitted J.P. Morgan Asset Management to take a 51% stake in its funds J.V.) Invesco Great Wall is also among the oldest funds JVs in China. It is today led by Shenzhen-based CEO Ken Kang Le.

Robo reservations

In China, Invesco is leading the way in digital opportunities. Elsewhere it seems to be running with the rest of the herd. In the U.S. and the U.K., it has made digital acquisitions: Jemstep, a B2B robo-advisor that services U.S. bank distributors, and Inteliflo, a British platform to support financial advisors.

“We haven’t found the right use case in Asia,” Lo said. Onboarding a digital B2B (of B2B2C) platform needs scale, but Asia is fragmented, with each market requiring its own business and compliance needs.

“Digital transformation is still evolving,” Lo said. “My guess is it can be like it is in China, where it’s a real thing that has become a major part of the industry.” But what that looks like elsewhere remains hard to know – or at least hard for justifying a business case.

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Asset & Wealth Management

New China distribution not just for money-market funds

Investors on digital platforms are beginning to look to other products, says BEA Union’s Rex Lo.




Rex Lo, BEA Union Investment

This week DigFin is highlighting three asset-management firms’ approach to digital distribution, particularly in China. We will also provide strategies from Invesco and AllianceBernstein. Go here for more insights into digital asset and wealth management.

Retail investors in China accessing funds via digital platforms are beginning to diversify away from money-market funds. That is creating opportunities to push ETFs and active funds, says Rex Lo, managing director for business development at BEA Union Investments.

China’s retail funds industry is mainly about money-market funds (MMFs). The total industry size is Rmb13.2 trillion, or $1.9 trillion, of which MMFs account for 57%, or Rmb7.7 trillion.

Among MMFs, by far the biggest player is Tianhong Asset Management, whose product, Alibaba’s Yuebao fund, is Rmb1.2 trillion in size, or $162 billion – the largest money-market fund in the world.

It’s no surprise then that digital distribution platforms in China mainly cater to MMFs. Lo says until recently, MMFs accounted for about 80% of all funds sold on digital platforms. This is propelled businesses such as Tianhong (which of course is sold via Ant Financial) and a few bank-affiliated fund houses with big MMF products, such as CCB Principal and ICBC Credit Suisse.

But it has made digital distribution of limited interest for fund houses looking to sell equity funds or other actively managed products; for them, traditional distribution via banks has remained the only viable channel.

MMFs: less big

Lo thinks this is changing, however.

The popularity of MMFs lies mainly in the fact that they offered high returns combined with guarantees, real or assumed by investors – assumptions the government has been reluctant to upset.

Yuebao and other MMFs usually invest in non-standardized wealth-management products (themselves supposedly “guaranteed”, with investors assuming a government backstop), that returned 5% to 8% to those managers. They in turn offered investors 5%, an equity-like return on what’s meant to be an ultra-safe and liquid asset class.

Over the past few years, however, Chinese banking and securities regulators have been trying to shift the funds industry onto a footing that respects risk and return, and clamping down on the supply of shadow-banking instruments available to portfolio managers.

“Today MMFs return only a little over 2%, while A shares are doing well,” Lo said. “As demand for money market funds declines, turnover has fallen, so these distributors are now promoting index or active funds.”

In recent months, Lo says, MMFs account for only 70% of sales on digital channels, with ETFs now gaining ground.

Accessing the mainland market

BEA Union is able to sell its Hong Kong-domiciled Asia fixed-income fund to Chinese retail investors through a scheme called MRF, Mutual Recognition of Funds.

This program, which began in 2015, allows fund managers on either side of the border to sell eligible products through a master-agent arrangement. Regulators in mainland China have been slow to approve such funds, however, and there are only seven Hong Kong products available via MRF, including BEA Union’s (and 48 mainland funds available for sale in Hong Kong).

Lo is hoping to take advantage of the shifting fortunes among asset classes to use digital channels to push BEA Union’s bond fund.

Platforms such as Ant Financial are requesting the fund house for more material around equities and active funds management. It’s a big, long-term commitment to investor education – especially for foreign fund managers whose ranking is low on Ant Financial and other digital platforms.

“Domestic investors want familiarity,” Lo acknowledged. “But we continue marketing because we want to be on the platform. Today it’s more for exposure than real [inflows], and ticket sizes are as small as Rmb100 ($14). But if you have 100,000 investors, that becomes a lot of money.”

The intention of this ongoing marketing is to become sufficiently well known among Ant’s users to take advantage when retail investors want to invest overseas.

New ways of doing business

Adding platforms such as Ant to traditional distribution methods has been an eye-opener, Lo says. “They don’t think like a traditional finance company. They’re a fintech, so they’re very responsive and open to new ideas. And they’re independent – they’re not a bank with its own funds J.V. – so there aren’t conflicts of interest.”

Marketing was not the only part of business that had to adjust.

“I was amazed when we began to work with these firms,” Lo said. “Enhancements that would take months to get done in Hong Kong take them a few days. We can learn a lot from working with fintechs.” It’s knowledge that will come in handy as more banks in Hong Kong and Asia add mutual funds to their mobile trading apps, as Standard Chartered did earlier this year.

There are limits, however, to how far a fund house can go selling products on mainland China’s digital platforms.

GBA play?

Those channels are limited to funds from either local licensed retail-facing houses, or offshore products eligible via MRF. The retail funds market in China, at $1.9 trillion, is only a fraction of the total investments industry, which is about $9.7 trillion – but that includes separate licensed businesses for asset managers linked to insurance companies, or to trusts, or to banks. Those businesses for now can’t market to retail or use sell via e-commerce players.

BEA Union is a joint venture formed in 2007 between Bank of East Asia and Germany’s Union Investments. Its initial business model was to service local pension and insurance customers, so its investment expertise has been mainly in Asian fixed income. It has since developed funds in Hong Kong and Asia equities, and its total AUM is now $11.2 billion.

It is the only foreign fund house to establish a wholly owned foreign enterprise (Woofie) in Qianhai (part of Shenzhen), as opposed to Shanghai. This was partly because the authorities in Qianhai were very welcoming, and because Bank of East Asia has a presence in southern China, and the fund house hopes to take advantage of this should cross-border opportunities emerge (under the concept of a “Greater Bay Area”).

This medium-term ambition is another driver of BEA Union’s strategy to build an online brand on Ant Financial and other digital platforms.

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Meet three Swiss fintechs digitalizing wealth mgmt